ISE460 Fall 2008Session 1510/14/08Assignment 08Due 10/21/08 Back to team homeworkNo.1 (2 points)Consider the following investment projects:Assume that MARR = 20% in the following questions:(a) Compute i* for each investment. If the problem has more than one i* identify all of them.(b) Compute IRR (true) for each project.(c) Determine the acceptability of each investment.No.2 (2 points)Agdist Corporation distributes agricultural equipment. The board of directors isconsidering a proposal to establish a facility to manufacture an electronically controlled“intelligent” crop sprayer invented by a professor at a local university. Thiscrop sprayer project would require an investment of $10 million in assets andwould produce an annual after-tax net benefit of $2.1 million over a service life ofseven years. All costs and benefits are included in these figures. When the projectterminates, the net proceeds from the sale of the assets will be $2 million. Computethe rate of return of this project. Is this a good project at MARR = 15%?
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